The Impact of Racial Segregation on College Attainment in Spatial Equilibrium

RePEc Short ID: pko790
ORCID iD: 0000-0001-8464-2470

Gregory, Victoria; Kozlowski, Julian; Rubinton, Hannah

doi:10.20955/wp.2022.036

Working Paper Revision

The Impact of Racial Segregation on College Attainment in Spatial Equilibrium

Abstract: This paper seeks to understand the forces that maintain racial segregation and the Black-White gap in college attainment, as well as their interactions with place-based policy interventions. We incorporate race into an overlapping-generations spatial-equilibrium model with neighborhood spillovers. Race matters due to: (i) a Black-White wage gap, (ii) amenity externalities---households care about their neighborhood's racial composition---and (iii) additional barriers to moving for Black households. We find that these forces account for 71% of the racial segregation and 64% of the Black-White gap in college attainment for the St. Louis metro area. The presence of spillovers and externalities generates multiple equilibria. Although St. Louis is in a segregated equilibrium, there also exists an integrated equilibrium with a lower college gap. We show that place-based policy interventions can reduce segregation and destabilize the segregated equilibrium.

Keywords: racial disparities; neighborhood segregation; education; income inequality;

JEL Classification: J15; J24; O18;

https://doi.org/10.20955/wp.2022.036